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Plans for a state mental hospital in Alabama started to come together in 1852. These plans stated that the hospital would be part of the Kirkbride Plan, which was considered "moral architecture" and was thought up by Thomas Story Kirkbride. He and Dorothea Dix were the main forces backing the hospital's construction, which began in 1853 based on Samuel Sloan's designs. However, the project was not finished until 1859. It was the first building in Tuscaloosa, Alabama to feature gas lighting and a central head. The asylum opened for use in 1861 under the name "Alabama Insane Hospital".

The hospital was later renamed for Dr. Peter Bryce, a 27-year-old psychiatric doctor from South Carolina and the hospital's first superintendent. Dr. Bryce studied psychiatry in Europe, worked in New Jersey, and later South Carolina. He was considered revolutionary in the world of psychiatry since he wanted to treat patients with kindness respect, and courtesy at all times. Bryce was also against the use of shackles, straightjackets, and other restraints, and they were eventually abandoned at the hospital in 1882. From 1872 to the early 1880s, a few of the patients wrote and edited their own newspaper, called The Meteor. Now, these papers give historians an idea of what life inside a 19th century mental hospital was like.

In the 20th century, the patient population grew while the hospital's standards of care decreased greatly. Lurleen Wallace, governor of Alabama, visited the hospital in February, 1967. She was driven to tears when an overweight and mentally challenged 9-year-old tried to hug her, meanwhile crying "Mama! Mama!". She asked her husband, George Wallace, who had the actual power behind her governorship, for funding on the hospital. Three years later, in 1970, Alabama was ranked last among U.S. Sstates in funding for mental health. By this time, the patient population had risen to 5,200 living in what was described as "concentration camp conditions" by the editor of the Montgomery Advertiser. One hundred Bryce Hospital employees were fired, including twenty professional staff, due to cigarette tax taking away mental health funding. In October of the same year, 15-year-old Ricky Wyatt, who had been labeled a "juvenile delinquent" and lived at the hospital despite he wasn't mentally ill, settled a lawsuit with the hospital. W. C. Rawlins, his aunt, was one of the employees to lose their jobs. They were against the terrible conditions and treatments that were used only to make the patients manageable. In 1971, it expanded to include the patients of Searcy Hospital and Camp Partlow, two other mental hospitals in Alabama. The court created agreements to form federal minimum standards in care of people with mental illnesses in institutions. By 1999, a new settlement agreement was made to recognize a great deal of progress. On December 5th, 2003, the case was finally dismissed by Judge Myron Thompson. The standards in agreement serve as a model nationwide known as "Wyatt Standards".

When it comes to the hauntings of the old Bryce Hospital, odd writings on the walls (including a lot of graffiti), strange noises, and cold spots seem to occur. There is also the feeling of being watched in several parts of the hospital. A few reports of telephones ringing (the hospital has no active phone number), furniture being moved on its own, footsteps in empty hallways, and strange cold and hot temperature swings in different spots.